Real Estate Counselors have identified the current and emerging issues that are expected to have the most significant impact on all sectors of the real estate sector, each determined through surveys, discussions and debates among board members in general. As the commercial real estate industry faces an era of unprecedented uncertainty, the influence of inflation and interest rates is this year's top concern for the 1,000-member organization. Geopolitical risk and the implications of hybrid work round out the three main ones. At the time of writing this article, the macroeconomic signals are decidedly mixed.
The downside is the continued volatility of the stock markets, given that these markets have (imperfectly) a vision of the future. On the positive side, according to the monthly GDP indicator from IHS Market, the increase in GDP in April more than offset the fall in March, which in turn was slightly revised upwards. In addition, the 10-year Treasury rate curve minus 3 months remains well above 100 basis points and is close to its 30-year average. Employment growth remains strong, with typical upward revisions.
There is always the “next recession”, but in the absence of unpredictable action, a recession is unlikely in the short term. The immediate economic threats continue to be the sustained pandemic, supply chain problems and policy errors. Today, many factors influence the tug-of-war between supply and demand, and the best supply chain systems work flexibly. Most would assume that all of this is a side effect of COVID-19, which is only partially true.
Many experts believe that this began long before COVID-19 and may last longer than our vaccines and boosters. We all witnessed the delay of cargo ships in the port of Los Angeles and the bottling caused by the cargo ship “Ever Given” in the Suez Canal. The COVID-19 pandemic caused an increase in awareness of scientific research and findings related to the health of buildings and workspaces. The preparation and planning for the return to the office by companies and building owners further highlighted the importance of workplace health and well-being for productivity and employee attraction and retention.
As a result, building operators follow the guidelines recommended by ASHRAE and CDC to reduce the risk of infection by airborne viruses and improve the cognitive function of building occupants by increasing the percentage of fresh air that the ventilation system circulates throughout the building. The term isn't new, but the focus is growing. CRE refers to adaptive reuse 2.0 as “The Neighborhood Approach”. It aims to address the challenges of what to do with missing suburban malls and the thousands of large empty retail stores that are surrounded by attractive and affordable neighborhoods.
It requires a new examination of suburban communities to reposition and transform areas that could be at risk of devastation. A number of projects have been completed or are underway to help reconnect communities, prevent blight and restore green spaces. For example, if determined to be significant, real estate investors should provide a list of all properties by zip code with the physical risks identified and the percentage of buildings or properties located in areas at risk of flooding. While you don't have to be the best seller in the world to be successful in real estate, you'll need to sell and not just properties, you'll also have to sell yourself.
The economy has enjoyed historically low interest rates for years, and a sudden or significant increase in rates could reduce the capital available for commercial real estate development, which could undermine some initiatives based on the real estate sector. It's rare for someone who has a good relationship with their real estate agent to stop working together on future projects, and even rarer for that friend not to recommend them to someone in their life who asks for help. A specific category of real estate that has grown considerably in popularity among investors in recent years are real estate investment trusts (REITs). In this post, we'll identify the most common challenges you'll face in your first year as a real estate agent and how to successfully address them.
The federal government is rapidly developing new requirements in response to climate change for a variety of real estate development projects, uses and operations. With the proliferation of REITs in recent years, there is a greater likelihood that some of these organizations are being managed by leadership teams that lack sufficient knowledge and experience in real estate, finance, underwriting and other disciplines needed to successfully manage these complex organizations in the event of a market crash. In other words, selecting the right management team for a real estate investment will become increasingly important. The growing recognition by stakeholders of the importance of social factors, such as diversity, as well as health and well-being, in the commercial real estate sector is creating new expectations for investors, employees and the communities in which the real estate sector operates.
You need to know how to create your own website, optimize it for search engine traffic and buy ads on social networks to promote your real estate business. For example, “while real estate investors can reasonably expect an uptick in demand next year, the ability to anticipate when occupancy and rent will increase frustrates underwriting,” the report notes. Energy conservation, including reform, sustainability and renewable energy, has been a recurring theme in the real estate sector for more than 50 years. If this trend continues, it's a good indicator that more companies will need real estate, which could be an advantage for REITs investing in commercial properties, such as office buildings, manufacturing plants, and other facilities that house a company's workforce.